Toyota shareholders back board after criticism of governance

With Toyota investors backing the company’s management and rejecting a shareholder challenge over its climate policy, the world’s biggest carmaker by sales has come under unprecedented pressure to reform its governance.

Results from the annual meeting, though widely expected, sent Toyota shares up 8 percent on Wednesday, following a 5 percent rally the previous session, as the company said it plans to commercialize its solid-state battery technology in an electric vehicle by 2027. Revealed ambitions to do. as soon as possible.

Governance experts and environmental activists say the unusual challenge to the country’s biggest company by market capitalization marks significant changes in the Japanese market, as shareholders seek higher governance standards and transparency.

Prior to the AGM, US proxy advisor Glass Lewis recommended that shareholders vote against the reappointment of Akio Toyoda, the grandson of the company’s founder and widely speculated to be the future head of Japan’s powerful Keidanren business lobby, as Toyota chairman. Went.

Glass Lewis argued that Toyoda chaired a board that did not have enough independent directors. Toyoda stepped down as chairman of the group last month but remains chairman of the board.

In response, Toyota has said it is taking steps to increase diversity and reduce the number of internal directors.

Another proxy advisor, ISS, also recommended investors support a shareholder proposal, submitted by AcademicPension, a $20bn Danish fund, and two other European asset managers involved in the carmaker’s climate lobbying efforts. But were demanding more disclosure.

Following the recommendations, America’s two largest public pension systems – the California Public Employees’ Retirement System and the Office of the New York City Comptroller – voted against Toyoda’s re-election. Along with the Church of England Pension Board, American Pension Plans also supported a shareholder resolution on the company’s climate policy.

“The fact that such a proposal exists is significant enough in itself. It shows that dialogue alone is clearly insufficient,” Toyota said after attending the company’s meeting in the city. said publicist Daniel Reed.

Shareholders voted in favor of Toyoda and nine other board members, but the division of the vote has not yet been released.

Despite the proxy advisors’ recommendations, there was no significant risk that Toyoda would be ousted as the company has large cross-shareholdings and is strongly supported by retail investors.

Still, Toyoda had an approval rating of 96 percent last year, with analysts saying any drop in that figure would signal investor dissatisfaction with the company’s strategy.

On the manufacturing side, the carmaker has been criticized in recent years for not being aggressive enough in rolling out electric vehicles and for appearing overly protective of its hybrid technology.

In response to a shareholder question about Toyota’s modest share of global sales of electric vehicles, according to participants, executives reiterated their stance on Wednesday that a multi-pronged approach was needed.